Jana Profits Off OIS, Safeway and Japan Airlines In Q3

Jana Partners, the event-driven hedge fund headed by Barry Rosenstein, made a gain of 3.2 percent in September, bringing year to date gains to +14.3 percent, according to a report from II Alpha’s Stephen Taub. The Jana Nirvana Fund gained 4.8 percent in the last month, pushing overall returns to +22.2 percent and making it one of the best performing hedge funds of the year.

Rosenstein up in Japan Airlines, Oil States International

The healthy gains across all of Jana’s funds come as most of its holdings showed strong performance in September. Jana partner’s newly initiated position in Japan Airlines Co Ltd (TYO:9201) was up close to 14 percent in September alone, and has gained 16.5 percent in the third quarter. In the Q2 investor letter, Rosenstein expressed his hope that increased air travel with improving health of Japanese economy and consumer will drive revenue growth at JAL.

Other positions that the fund added in Q2 included Oil States International, Inc. (NYSE:OIS). The holding is also a favorite of David Einhorn’s Greenlight Capital. The service in the oil and gas industry netted a 16 percent appreciation in share price in the last month. Oil States International, Inc. (NYSE:OIS) is an activist position of Jana; the fund holds 6.5 million shares and options to acquire another 1 million, landing it among the top three positions of the hedge fund.

M&A events drive Rosenstein’s portfolio

Several of the hedge fund’s stock picks have underwent M&A activity in the past months. The fund picks on value stocks where it can push for change itself or which are undergoing event-driven changes due to other reasons. The hedge fund bought Health Management Associates Inc (NYSE:HMA) and Community Health Systems (NYSE:CYH) in the second quarter. Community Health put up an offer to buy Health Management Associates Inc (NYSE:HMA) and later finalized the terms in Q3 in a $3.9 billion deal. The stock of Health Management Associates Inc (NYSE:HMA) ended September flat, however shares have gained 43 percent YTD. Larry Robbins’ Glenview Capital is a major shareholder at HMA and was seeking to oust the board earlier.

Jana Partners also holds a position in Elan Corporation, plc (NYSE:ELN) which announced that it will be acquired by a newly formed holding company in a cash and stock transaction.

CommonWealth REIT (NYSE:CWH), another of Jana’s holdings, is also under pressure from Corvex Management LP and Related Fund Management to shake up the board. The company agreed to change board members and add three new trustees. CommonWealth REIT (NYSE:CWH) also agreed to change the way it calculated management fees as pressure from activists mounted up.

Jana’s activist position in Safeway and others

Safeway Inc. (NYSE:SWY) gained 23 percent in the last month. Jana holds 6.2 percent of the chain store’s shares. The fund disclosed the position on September 17 and the shares of Safeway have gained 23% in the last month, adding to Jana’s gains in September. Jana intimated in the 13D filing that it will seek talks with the company’s management and will explore options to improve profitability in underperforming areas.

Other activist holdings of Jana Partners, Agrium Inc. (NYSE:AGU) was down 2 percent in last month whereas Ashland Inc. (NYSE:ASH) was up 6 percent over the same period.